Saturday 5 January 2013

Bitcoin Made Simple

Bitcoin is a decentralised P2P electronic cash system without a central server or trusted parties.

Bitcoin has four key properties:
• Money without Borders
• Payments without Regulation
• Currency without Government
• Transfers without Banks

Anyone with either a smartphone (eg. iPhone) or computer and an internet connection can pay or receive bitcoins. No bank account is required.

Bitcoin in layman's terms:
As a new open-source p2p payment system – Bitcoin is a revolutionary technology which enables virtually instant payments between any two people, or entities, anywhere in the world, securely, privately, and with far lower fees. Bitcoin is making global e-commerce safer, more efficient, and more profitable.

The Bitcoin protocol is a new and unique value transfer system and 'bitcoins' can be thought of as a pure digital (and digitised) 'currency.'
Bitcoins are traded and can be purchased on open, international markets against other fiat (ie. government controlled and issued) currencies like US Dollars, Sterling Pounds and Euros. However, unlike other currencies, bitcoins are not controlled by any Government, Bank or other organization – bitcoins are issued and regulated by mathematical principles instead of a Central Bank or bank corporation.

Hundreds of thousands of people are now using Bitcoin around the world, and the number of Bitcoin users is growing every day as new merchants and customers discover its unique advantages:

• Transactions are irreversible with zero chargebacks.
• Risk-free payments from anyone, globally, in any country.
• Lower fees than credit cards and Paypal.
• Greater security and privacy for both merchants and their customers.

Benefits of Bitcoin for Customers:
- Send money with virtually zero fees
- Send money to anyone, anywhere in the world
- No frozen accounts or blocked payments
- Always open, no holidays
- Hedge against the inflation of fiat currencies
- Transfer any amount - from fractions of a penny to millions of dollars, easily
- Completely avoid all counter-party risk whatsoever
- Maintain financial privacy
- Prevent identity theft, through non-exposure of personal details

What is publically available from a Merchant and Consumer perspective to use Bitcoins

For Merchants:
Of primary importance is merchant processing, which is the ability for merchants to accept Bitcoins on a website. Paysius.com and BitPay.com both offer this service. Using these systems, the merchants can have the Bitcoin payments auto-converted to USD (or other currencies) and deposited into their bank accounts. The main benefits here are zero-chargeback risks and far lower fees than with credit cards.

Benefits of Bitcoin

For Consumers;
- E-wallets like Paytunia.com and Blockchain.info
- Mobile apps like BitcoinSpinner
- Exchanges for trading/investing/speculating on BTC such as MtGox and BitStamp
- Directories of merchants who accept Bitcoins, such as https://en.bitcoin.it/wiki/Trade
- "Middlemen" services which allow consumers to spend bitcoins with various merchants (such as spendbitcoins.com)
- Cashout options such as the upcoming BitInstant Paycard (USD denominated Mastercard, reloadable using Bitcoin)

Benefits of Bitcoin for Merchants:
- Accept online payments with fees far lower than credit card or Paypal (0.5% vs up to 2.9%)
- Accept online payments from any country, with no risk of fraud whatsoever
- Have immediate access to "good funds"
- Zero chargeback risk
- No need to store sensitive customer billing details (reduce liability, security costs)

More Bitcoin info?

Bitcoin Non-Technical FAQ here: